I run into it constantly: I don’t need a contract, we’re friends! Nothing’s going to ever come before that friendship. Sadly, that often isn't how things end- one of my friends just had a falling out with a close friend and partner, partially because they had never spelled out what they each wanted in their business relationship. Here are 3 reasons you should consider writing out a contract for your next project:
1. Contracts are about communication. In business, there’s no better way to clearly communicate your expectations than by writing a contract. Each party gets an opportunity to explain their position, make modifications, and then agree to a plan. This helps prevent misunderstandings later down the road, and can often head off major financial catastrophes.
2. Contracts spell out details. I recently did a tour where it was spelled out clearly in the contract that musicians would provide their own transportation to venues within a 3 hour radius of our hometown. When a musician complained that he wasn’t getting compensated for drive time to a venue two hours away, the band leader pulled out the contract and showed him his signature. A well-written contract can help avoid he said/she said niggling over details, and allow musicians to plan ahead.
3. Contracts explain expectations. When I’m booking my own group to do shows, I write all members a contract in an email, detailing when I expect them to a arrive, how to dress, and other details with a note at the bottom stating that by replying back, they agree to these terms (not legally, but as professionals).
If any of the musicians are late or violate any of the other stipulations, I can refer back to their email. Also, I occasionally add a note on my email that any musician that violates these terms will lose 50%-100% of his pay at the band leader’s discretion (note: always extend grace- this is for extreme cases only).
Here are things a contract can’t do:
1. It can’t keep you or your business partner honest. If you’re working with someone who’s trying to rip you off, they’ll figure out a way around any contract you write.
2. It can’t fix big problems. No contract can resolve a large difference of opinion, since you both have to be okay with what the contract says to sign it.
3. It can’t bind the other party. I’ve seen dozens of contracts broken in my career. In my experience, there’s almost nothing you can do to keep an individual in a contract that they want to get out of, short of an expensive lawsuit that will probably cost you more than you’ll receive and ruin your friendship forever.